Working Capital Management

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Definition of 'Working Capital Management'

A managerial accounting strategy focusing on maintaining efficient levels of both components of working capital, current assets and current liabilities, in respect to each other. Working capital management ensures a company has sufficient cash flow in order to meet its short-term debt obligations and operating expenses.
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Investopedia explains 'Working Capital Management'

Implementing an effective working capital management system is an excellent way for many companies to improve their earnings. The two main aspects of working capital management are ratio analysis and management of individual components of working capital.

A few key performance ratios of a working capital management system are the working capital ratio, inventory turnover and the collection ratio. Ratio analysis will lead management to identify areas of focus such as inventory management, cash management, accounts receivable and payable management.

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'Working Capital Management'

  • Working Capital Works

    http://www.investopedia.com/articles/fundamental/03/061803.asp
    ... making investment decisions. A good way to judge a company's cash flow prospects
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  • The Working Capital Position

    http://www.investopedia.com/articles/basics/06/workingcapital.asp
    ... A key management function is to make sure that a company's receivable and ... payment
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  • Active Management: Is It Working For You?

    http://www.investopedia.com/articles/mutualfund/09/add-value-active-investment-management.asp
    Active Management: Is It Working For You ... securities that trade in the secondary capital
    markets ... process, proponents of active investment management believe that ...

  • How To Calculate A Z-Score

    http://www.investopedia.com/articles/fundamental/04/021104.asp
    ... X1, Working capital/ Total Assets, -0.09, -0.08, 0. ... But WorldCom management cooked
    the books, inflating the company's earnings and assets in the financial statements ...

  • E & P Operators Raising Capex

    http://stocks.investopedia.com/stock-analysis/2011/E--P-Operators-Raising-Capex-CHK-SM-UNT-REXX0805.aspx
    ... (A company's efficiency, financial strength and cash-flow health show in its management
    of working capital. For more, see Working Capital Works.). ...

  • Series 65 Study Guide - Quantitative Methods of Evaluating ...

    http://www.investopedia.com/exam-guide/series-65/quantitative-methods/balance-sheet.asp
    ... The correct answer is "b", since cash (a current asset) will decrease, this also
    decreases working capital. ... Time Management Tips For Financial Professionals. ...

  • DCF Analysis: Forecasting Free Cash Flows | Investopedia

    http://www.investopedia.com/university/dcf/dcf2.asp
    ... after deducting operating costs, taxes, net investment and the working capital
    requirements (see ... Management says that its cost cutting program will push those ...

  • Operating Cash Flow: Better Than Net Income?

    http://www.investopedia.com/articles/analyst/03/122203.asp
    ... income and making adjustments to reflect changes in the working capital accounts
    on ... of a company's profitability, but under GAAP it allows management a range ...

  • How To Evaluate A Company's Balance Sheet

    http://www.investopedia.com/articles/basics/06/assetperformance.asp
    ... than tying up unproductive working capital in assets. ... Natural resource and large
    capital equipment producers ... of how effectively a company's management is using ...

  • All Is Well At Honeywell

    http://stocks.investopedia.com/stock-analysis/2011/All-Is-Well-At-Honeywell-HON-GE-UTX-ETN-EMR0727.aspx
    ... earnings, meaning management is very savvy at keeping capital expenditures low and
    pushing through other efficiencies, such as working capital management. ...

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